1. Field of the Invention
The present invention relates to a system for trading fixed income financial instruments; and more particularly to a computer-implemented system for automated trading of U.S. Treasury Securities, Liquid Agencies, and Zero-Coupon Strips.
2. Description of the Prior Art
New client demands, technological innovations and tighter regulatory controls are changing the shape of the money management industry. A new trend in asset management now provides clients with systems that allow execution of trades without the concomitant fees. The evolution of the Internet and the development of new technological capabilities are pressing security houses to develop methods that facilitate consumer needs for electronic trading.
Concerned with the lack of price transparency in the fixed income market, the SEC and other regulatory bodies have called on the National Association of Securities Dealers (“NASD”) to: (1) adopt rules requiring dealers to report all transactions in U.S. corporate bonds to the NASD and to develop systems to receive and redistribute transaction prices on an immediate basis; and (2) create a system for transactions in corporate bonds that enables regulators to take a proactive role in supervising the corporate debt market rather than only reacting to complaints brought by investors. Arthur Levitt, Chairman of the U.S. Securities and Exchange Commission, Sep. 9, 1998, The Importance of Transparency in America's Debt Market, Speech at the Media Studies Center, New York, N.Y. As stated by Chairman Levitt, “[t]ransparency, disclosure and accountability . . . are the essential ingredients to confidence. And without [confidence] . . . markets can neither sustain long term growth nor adapt to a rapidly changing environment. Ibid.
The prior art has recognized the need to adopt computerized trading systems. U.S. Pat. No. 4,674,044 discloses a data processing apparatus that makes an automated trading market for one or more securities. This patent discloses a system comprising, among other components, a means for retrieving the best obtaining bid and ask prices from a remote data base which covers the ensemble of institutions or others making a market for the relevant securities. U.S. Pat. No. 5,893,079 discloses a system for receiving, processing, creating, storing and disseminating investment information which includes an external data interface for communicating with non user outside sources of investment data and processing and delivering such data to a central storage database for access by users.
While certain aspects of electronic trading have been automated, conventional computerized trading systems do not address the concerns expressed to the brokerage industry by regulatory bodies, and in particular, those regarding the fixed income market. Without these tools, the brokerage industry will be unable to sustain increased client demands, changing technological requirements and tighter regulatory controls imposed by the present marketplace.
Needed in the art are computerized systems for trading of high liquidity financial instruments that provide consumers with the best price at the time of execution and retrieve prices for future analysis. Also needed are systems which can utilize historical data to price securities in the event that active quotes are unavailable.